Since 2009, consumer lending by banks has contracted sharply. With unemployment reaching 2.5m last week, and set to rise further, many people are adjusting to shrinking incomes and many more are having to cope with huge levels of over-indebtedness. According to the Bank of England, between October and December 2010 alone, there were more than 1,600 county court judgments issued daily, while every four minutes somebody was declared bankrupt or insolvent.

As the cuts bite and more public sector workers and contractors fall into debt, spiralling numbers of people will need to rebuild their credit files and start convincing the banks they can repay loans again. A couple of cases recently have shown me how hard this is going to be.

A year ago, Richard lost his job as a building supervisor for a construction and buildings maintenance firm looking after council housing stock. His company had lost its local authority contract. He fell behind on various debts, foolishly took out more to help pay off some of them and found it impossible to deal with his creditors.

We negotiated with the creditors, helped to set up a financial plan he could stick to and stopped the harassing phone calls. It's been tough for him to adjust to his new economic reality but he has, and is slowly paying back his creditors. But unless he gets a job quickly it will take him many years to repay those debts, and for the next six years he'll likely be listed as a defaulter on his credit file. Since most of his disposable income is eaten up by repayments, if he does have a sudden cost – a high fuel bill, for example – it's probable he will only be able to get access to finance from a payday, doorstep or other subprime lender.

Then there is Samiha, a single mother living in a council property in north London. She works part time. A couple of years ago we helped her to open a bank account and get a loan for a car. She came back recently for a new loan and had a new basic bank account (which doesn't require a credit rating check). Her old account had fallen into default from almost a month after we helped her set it up. She'd gone £8 over her limit, incurred a charge, incurred another charge for being in unauthorised overdraft, missed a direct debit, incurred another charge, and then another charge. The charge for going £8 overdrawn had become £900.

When she went to her new bank for a loan or overdraft, her new bank did a credit score, saw the default on the old account and denied her the finance she needed. We helped her reclaim the unfair charges from her old bank and, since banks often take six months or more to update settled files, we made sure it was done immediately. Although this debt is cleared, her credit history will still be marked, which may make it hard for her to get the best rates or additional credit in the future.

I fear we may be the only source of affordable credit for these people for some time. Like the 7 million to 8 million people who are routinely denied loans for less than perfect credit records, their predicament helps to explain the recent growth in high-cost lenders.

In both cases, clients were judged on their past problems and not their present circumstances. Their treatment was also a byproduct of the drive towards greater automation and computerised decision-making, which masks the nuances that help to explain previous financial problems. With so many recovering from the biggest bout of over-lending in history, and growing unemployment fuelling debt problems, rehabilitating damaged credit records, even with good repayments, will not happen. We're going to need the human touch and smarter use of data, or for many the credit crunch will continue for years to come.

• Names have been changed. Faisel Rahman is director of Fair Finance, a financial inclusion social enterprise.